Independent allocation of control and cash-flow rights
Firms' issuance of non-linear securities, such as debt or options, creates risk-shifting incentives that may lead to inefficient outcomes. This widely accepted result rests on the assumption that firms' control rights are coupled with the residual claims, and thus held by equity holders. We relax this assumption and analyze a setting where cash-flow and control rights are allocated independently. Although payoffs are determined solely by rights over realized cash flows, control rights hold value because they influence the probability distribution of those cash flows. Cash-flow and control rights often act as substitutes, but cash-flow rights can reduce investors' payoff when their impact on decision-making is sufficiently strong. When issuers and holders of a non-linear security have sufficiently distinct cash-flow rights, the equilibrium features efficiency with full surplus extraction; as their cash-flow rights converge, a trade-off between efficiency and surplus extraction emerges. In that case, a sufficiently skewed distribution of payoffs can restore efficiency.
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Andrés Fioriti es PhD in Economics (2016) por University of Warwick. Desde 2016 es docente del Departamento de Economía de la Universidad Nacional del Sur. También es Investigador Adjunto en el Instituto de Matemática de Bahía Blanca (INMABB-CONICET) desde 2017. Su trabajo de investigación se centra en el estudio de subastas y licitaciones, y en la teoría de juegos en general, con énfasis en pagos contingentes. Ha publicado en Management Science y European Economic Review, entre otras revistas especializadas.
Doctor en Economía, University of California at Berkeley. Director de la Licenciatura en Artes Liberales y Ciencias, un bachillerato universitario (BA). Fue presidente de la Asociación Argentina de Economía Política y editor en jefe del Journal of Applied Economics. Publicó en Ensayos Económicos, Económica, Journal of Development Economics, Estudios de Economía, Journal of International Economics, Journal of Public Economic Theory, Public Choice, Kyklos, Economics & Politics, Economía LACEA Journal y History of Economic Ideas, entre otras revistas académicas. Trabaja en un libro sobre el BA para flexibilizar la educación universitaria en Iberoamérica. Ciclista urbano y corredor.